The Politics Of Deficit Cutting

The industrial world's swing toward deficit reduction could be impeded by a political backlash sparked by the current slowdown in economic activity. As measured by the Organization for Economic Cooperation & Development, Britain's deficit will fall from 7.9% of GDP in 1993 to 2.6% next year, a drop amounting to 5.3% of GDP. Aside from Japan, which has turned to fiscal stimulus to stave off a deflationary spiral, other industrial nations are following suit (chart).

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